John Paterakis has made a lot of bread. Now it's nourishing his $350 million dream of a new neighborhood on the Inner Harbor

THE BAKER''S PLAN

September 24, 1990|By Timothy J. Mullaney

Look out the window from the reception area outside John Paterakis' office and beyond the aging industrial foreground you can barely see the shiny towers of the Inner Harbor's present. But step into the windowless conference room and you can easily see the Inner Harbor's future.

Paterakis isn't your everyday developer, any more than the $350 million Inner Harbor East "new neighborhood" he plans to build just south of Little Italy is an everyday project. He was making piles of dough when other developers were little kids -- real dough, because John Paterakis is a commercial baker whose companies make everything from Giant brand bread to McDonald's hamburger rolls. But this non-developer is in charge of what stands to be Baltimore's most important development project of the 1990s. Forget Trammell Crow Co. and its 44-story office building, the biggest in Baltimore's history. Forget the new stadium. This is it.

It will have 800 or more apartments, condominiums and town houses. It will have three midsized office buildings, and one smaller building of doctors' offices. Retail stores such as dry cleaners and flower shops will actually be aimed at the neighborhood instead of tourists, despite being only a short walk from the National Aquarium and Harborplace. There will be an Embassy Suites hotel and a 204-slip marina. Buildings will be 12 or 13 stories, tops.

All together, the eight-city-block development will form a bridge between the high-rise Inner Harbor and quaint, low-rise Fells Point. City officials have compared the project to building a project the size of Charles Center with the old-fashioned urban-yet-small-scale feel of Mount Vernon Place.

The new neighborhood hasn't come quickly. The development has been seven years in the planning, dating from a 1983 study commissioned by the city. The contract with the city that is making Inner Harbor East go forward -- crafted to insulate the developers from much of the risk normally involved in large-scale development -- is the result of three years of negotiations between Mr. Paterakis and his partner, Gilbane Properties of Providence, R.I., and the administration of Mayor Kurt L. Schmoke.

Construction will begin soon on reconfiguring streets and utilities serving the area, and on building a waterfront promenade and marina. That work will take about two years, and the construction of the first buildings will begin when the infrastructure is done or almost done. The first apartments will probably be built in 1993, a Gilbane official said.

It will probably be another eight or 10 years before Inner Harbor East is completed, and the project will face big challenges in the marketplace. The office buildings Mr. Paterakis plans will be well outside the city's central business district, competing in a market that could be glutted. The condominiums he plans will also compete in a crowded market where nearby projects have met with mixed results.

got to be market-driven," said Mr. Paterakis. Over and over, Mr. Paterakis and Michael E. Culbert, Gilbane vice president, stress how flexible the developers have to be, how plans will change if condo markets heat up or retailing plummets, or any of a thousand other things happen that change demand for anything they plan to build.

"If we don't have the demand for one product, we'll try to get another out of it," Mr. Paterakis said. "The market will tell us what's the right mix."

Despite the uncertainty, he's ready to get going.

"There's a lot of excitement in that land. Just looking at it and knowing what can go there is exciting."

*

John Paterakis, high-rolling developer, has come a long way from Patterson Park High School, where he graduated in 1947. The Highlandtown-bred Mr. Paterakis didn't go to college because his father got sick and H&S Bakery Inc. (named for Harry and Steve, Mr. Paterakis' brother-in-law and father) needed him.

"I did everything," he said. "It was a small bakery."

By the mid-1960s, Mr. Paterakis' baking business had a goodeal going -- supplying buns to a thriving hamburger chain called Gino's, for the Baltimore Colts' star defensive end Gino Marchetti. But another chain that wasn't as big in the East asked Mr. Paterakis to give up the Gino's account to do business with them -- on a handshake. "I was scared," Mr. Paterakis admits.

The new customer was McDonald's, which has since made up many times over for any anxiety it caused Mr. Paterakis. He says his Northeast Foods Inc., which serves McDonald's, now has annual sales of $135 million. H&S Bakery, which does institutional and private-label baking, has sales of about $85 million.

Mr. Paterakis will allow that his company grew up with McDonald's. "That makes you smart," he cracks.

Today, the baking companies' stock is actually owned by Mr. Paterakis' four sons and a nephew, aged 30 through 46, all of whom work for the baking companies.